Publications

The Effects of Child Care Subsidies for Moderate-Income Families in Cook County, Illinois

Federal funding for child care subsidies has increased substantially since 1996. Although many more low-income families receive help paying for child care, there is little rigorous evidence to guide states’ decisions on structuring subsidy programs. This is the final report of a random assignment study in Cook County, Illinois, that seeks to answer two policy questions: whether providing subsidies to families whose incomes are just over the state’s eligibility limit affects their child care and employment outcomes, and whether extending the length of time before families must reapply for subsidies affects the receipt of subsidies and related outcomes.

This study included 1,884 families who applied for child care subsidies in Cook County, Illinois, between March 2005 and May 2006, and whose incomes exceeded the state’s eligibility limits. Families were randomly assigned to a program group, which was approved to receive subsidies even though family income was above the usual eligibility limit, or to a control group, which remained ineligible for subsidies as long as family income was above the state guidelines. In addition, a random half of the program group was asked to confirm its eligibility for subsidies every six months (the state standard) while the other half was asked to reconfirm eligibility annually. Because families were assigned at random to the program and the control groups, any systematic differences that emerged after random assignment can reliably be attributed to the policy changes being studied.

The results suggest the following:

Approving families to receive subsidies did not lead to increased employment or earnings. In large part this is because most study participants were steadily employed. Over the two-year follow-up period, program group families received subsidies for eight months longer than control group families. However, both the program group and the control group earned about $26,500 each year on average, and more than 85 percent of parents in each group worked in any quarter. Thus, there was little room for the program to have an effect on employment for families who were eligible for the study.

Child care subsidies affect a range of child care outcomes. Compared with the control group, families in the program group reported greater use of center-based care, more stable child care, increased satisfaction with care, and fewer job-related problems due to child care.

Extending the eligibility period increased the use of subsidies but had few other effects. Over the two years of the study, families who had to confirm their eligibility once a year received subsidies for 2.5 months longer than those who had to do it every six months. However, the longer redetermination period had few effects on other child care and employment outcomes.

The results suggest that child care subsidies might not be needed to support parental employment for the nonpoor families included in this study, but they do have a range of effects on child care outcomes that could lead to other, unmeasured effects, such as reduced parental stress and increased family well-being.